The Conference Board released its consumer confidence index this week and the numbers are not looking too hot. They reported a number of 110.5, from 111.11 in January following a decline a month earlier. This comes amidst a mix of uncertainty in the world's economy as a whole. The U.S. is expecting large spikes in inflation, gas prices on the rise-scaring the pocket of the average consumer, and a general drop in the purchase of new homes, vacations, cars, and other common consumer goods. Thus, we can tell that Americans are weary about spending too much of their disposable income on items that can be considered non-essential. Major international events, such as the increasing hostilities between Russia and Ukraine may scare off the American consumer even further as the world economy at large seems to be in retreat. Some of these metrics are opposed by more optimistic numbers such as the Present Situation Index which tend to support a happier U.S. consumer. The Conference Board is somewhat hopeful that this metric will stay consistent in the coming months, however, major increases in consumer confidence will take corrections in the health of the domestic and world economies at large.
https://www.usnews.com/news/economy/articles/2022-02-22/consumer-confidence-ticks-down-in-february-on-inflation-fears
With large spikes in inflation, gas prices on the rise, and a general drop in the purchase of new homes the GDP will decrease as consumers will lean towards spending money on necessities. The economy is already struggling and with Ukraine and Russia, the future doesn't look promising. The cartoons provided a lighter explanation of what exactly is going on.
ReplyDeleteI don't think it is surprising that consumer confidence is lowering because of all the current events in the world, including the situation in Ukraine. The inflation and rising prices in our economy is also probably scaring consumers and leading them to spend less of things they don't necessarily need, and spend more on necessities.
ReplyDeleteThis makes sense with the amount of uncertainties in world right now. With the continued issues with the supply chain, issues with Russia and Ukraine, and the soon to be increase in interest rates consumers will look to save and be safer financially.
ReplyDeleteThe current political situation and war in Ukraine have affected the global markets. It will be interesting to see if the consumer confidence continues to fall in the following months.
ReplyDeleteI think the major concern for the economy right now is obviously inflation, but when we combine inflation with the war in Ukraine then I think there is a lot to be concerned about. Americans should be concerned with the increase in gas prices as a result of the conflict, but I think President Biden will try to ease prices by releasing more reserves. It will be interesting to see how consumer confidence changes as the war in Ukraine progresses.
ReplyDeleteIt is not shocking that consumer confidence fell because of the current situation in the Ukraine right now, as well as the inflation in the overall economy. It will be interesting to see if consumer confidence will stay low or will increase in March.
ReplyDeleteI wonder how much more will the consumer confidence index will fall for March, as we'd be able to see the effects of the current geopolitical scenario in full effect.
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